Comparing L1 Storage Blockchain
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Comparing L1 Storage Blockchain
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TLDR below. This is not financial advice.
General Conclusion
Blockchain is growing and getting a lot of mainstream attention. As a result, more and more applications using blockchain technology to replace old technologies are appearing. Many are used to execute transactions (Bitcoin, Ethereum, Polygon, etc.), but another another usage is emerging — decentralised storage.
From solving the problem of storing data securely to being able to secure personal information from proprietary service providers, decentralised storage has the potential to solve the backlog problems in a centralised world through blockchain technology.
Data Storage: What is Decentralised Storage
When talking about data storage, we have the following methods:
Physical hard drives: Think of HDDs, SSDs used to store data (videos, documents, music, etc.) in your computer or the USBs that you use to carry data with you as you move around.
Centralised cloud storage: Data is hosted on a server and operated by a person or organisation (think of Microsoft, Google Drive, Apple Cloud etc.), not a brother. Your data belongs to them. Needless to say, this raises concerns about safety and security.
Decentralised cloud storage is where data is stored on a decentralised network everywhere by users and organisations that are incentivised to participate, save, store and keep data accessible.
The servers used for decentralised storage will be hosted by many parties, not just a single company. Anyone can participate and no one can shut the cloud down, thanks to smart contracts. They are incentivised to participate by receiving related tokens.
Problem: If Centralised Storage Exists, Why do we Need Decentralised storage?
Data leaks: There have been many news stories in recent times related to big names in the world (Facebook, Google, etc.) leaking user information.
Inaccessible data: Denial of service (DDoS) attacks can cause you and millions of people to lose data.
Increasing storage costs: High costs of bandwidth transmission as well as costs to expand memory to suit user needs.
Security and safety: Because centralised storage is essentially servers located in a few places, it is easy for attacks on the network to shut it down, or maybe a natural disaster can cause a storage place to be damaged or destroyed. All of these lead to loss of user data.
Lack of autonomy: Your personal data is not owned by you.
Surveillance and censorship: While there are several benefits to this, many disagree with information being censored and monitored.
How Decentralised Storage works
To make this clearer, let us compare centralised cloud storage and the decentralised alternative.
Centralised Storage
Through the internet, users can upload to or download files from data servers, which will relay or receive data from many different servers. In the event of data transfer problems, several centralised server locations in one location are used as needed.
The purpose of having so many servers is so that the data is always accessible even when there is maintenance happening. To improve security, when files are transferred from the PC to the server, they will normally be encrypted 128-bit according to the SSL standard. Once on the server, they will likely be 256-bit encrypted.
Even so, despite the security measures, only the hosting platform holds the encryption key, not the brothers.
Decentralised Storage
Decentralised storage means that data is stored on many different computers (called nodes) on a decentralised network.
Similar to traditional cloud storage, when you need a file, you request and receive the file. Requests work the same way as BitTorrent and other P2P clients where you download pieces of data from network participants until you have all the files.
But this does not mean that the parties holding your files can read them. Instead, decentralised storage automatically encrypts files and only you hold the keys, ensuring that files can only be read by you.
Furthermore, by splitting data and sending it to different parties, no one can keep all of your files, which means an extra layer of protection.
Unlike centralised cloud storage that stores data in a few centralised points that may not be close to siblings (leading to users competing for bandwidth), the essence of decentralised storage is that the distribution and retrieval of data is processed and managed by nearby peers regardless of physical distance. The result is faster transmission speeds due to maximum throughput.
The benefit of Decentralised Storage
Reduced storage costs
With the potential to have hundreds of thousands, millions of nodes hosting your data, the available storage capacity will be much larger.
This will lead to lower costs when compared to traditional centralised cloud storage platforms (Google Drive and Microsoft require a high fee to be able to store more data on their cloud platform).
A fair price
Due to the constant competition between nodes (of course only those that provide the best quality and price will be able to survive), a fair price is almost guaranteed.
Faster
Traditional client: Servers are often congested when there is a large amount of traffic that exceeds the capacity of the network to handle. By applying P2P technology and eliminating centralised servers, multiple copies are stored in different nodes, and multiple copies of data will result in faster download speeds.
More privacy and security
Not only is the data encrypted, that encrypted data is also fragmented and divided among participating nodes. No one will be able to access the information or even know what you are storing.
Minimal data loss
With hundreds of thousands and millions of nodes participating, copies of the data will still be stored and preserved in case of transmission errors.
Decentralised Storage Blockchain: A Comparison
Filecoin
Filecoin ($FIL) is the coin used in Filecoin's decentralised storage network. Filecoin is a project of Protocol Labs. Filecoin's blockchain (FIL) works with a consensus mechanism called proof-of-spacetime.
How Filecoin Works
In Filecoin's network, there are three main groups: clients, storage miners and retrieval miners.
Clients are users who use the service to store and retrieve their data.
Storage Miners are those who provide space to store the data that clients submit. After the data is submitted, it is the duty of storage miners to continuously provide proof of the data they have taken to store the data.
Retrieval miners are those who perform data retrieval from clients and storage miners according to requests from clients.
Let's say, I want to upload a file of my photos to store in Filecoin's network (of course, I will have to pay for this). In Filecoin's network, there will be network nodes whose main function is to store data of users like me.
Because there are many different nodes, not all network nodes are entitled to storage. At this point, the network nodes will have to set the bids. Of course, the best bid will be chosen. Thus users with storage needs will get the lowest price.
After choosing a storage node, your image file will be encrypted and divided into several parts and stored in the nodes that have won the above bid.
$FIL Use Case
Clients use $FIL to pay a fee to store their data.
Storage miners are paid in $FIL for contributing hardware to store data.
Retrieval miners are paid in $FIL for contributing effort to data retrieval.
Arweave
Arweave is a blockchain data storage protocol based on new generation proof-of-access consensus algorithms to create the world's first truly permanent data store. The goal is to create a permanent, cheap, and moderated repository.
Arweave is also a blockchain protocol and has its own native token, $AR.
How Arweave Works
Arweave's infrastructure includes the following components:
Blockweave:
Has a similar structure to a blockchain chain, allowing expansion of on-chain storage but still save costs.
As the volume of data stored on the system increases, the hashrate for consensus decreases, thereby reducing data storage costs.
Proof-of-access:
Miners do not have to compete with each other for energy-consuming computing power, only for sharing storage memory.
Miners can install the software and run the miner program provided by Arweave on Linux and MacOS operating systems (the dev team does not recommend using Windows because it is less efficient and less reliable than the two operating systems mentioned above).
Wildfire:
A structured system to ensure that miners actively participate and share data as quickly and smoothly as possible.
This can be understood as a mechanism to encourage miners to work and actively contribute to the system.
Blockshadows:
According to the dev team, in previous blockchain networks, when each block was mined, the entire block was distributed to all nodes in the network. This not only wastes data, but also delays the system.
Arweave (AR) Blockshadows allows for less wasted data and faster execution of consensus and faster transaction speeds.
Applications:
Applications are developed by developers right on Arweave so that application users can interact, use and share data in this network.
According to Arweave, these apps are feature-rich, ranging from decentralised platforms to news sites and social networks.
$AR Use Case
Purpose of use of $AR:
For users (End Users) who want to use Arweave for storage, they must use the $AR token to pay fees - like a service usage fee.
$AR obtained by users is used to pay miners to maintain the network and provide services.
The amount of $AR obtained from transactions will also be partially paid to miners.
Ocean
Ocean Protocol is a protocol that allows users to exchange data in a decentralised manner while ensuring control, origin and transparency of data.
How Ocean Works
Ocean Protocol creates an ecosystem with five main components: data providers, data customers, community, marketplace, and developers.
But, in essence, Ocean Protocol only needs three components:
Data providers
Any individual, organisation, company, or government that has unoptimised data and wants to sell it for value.
Data customers
Those who need data to analyze and train their AI.
Marketplace
Where data customers and data providers meet each other's needs and can exchange, buy and sell data.
$OCEAN Use Case
The $OCEAN is designed to be used for the following three main purposes in the Ocean Protocol network, including:
Unit of exchange
$OCEAN is used as a unit of exchange in data/service transactions.
Staking
Data providers can stake their data and get corresponding rewards in $OCEAN.
Network rewards
$OCEAN is used as a reward for keeper nodes to ensure the network security level of Ocean Protocol.
MaidSafe
SAFE Network or MaidSafe is a project about the decentralised internet.
According to the project description, when MaidSafe is completed it will be a decentralised platform. It allows application developers to build decentralised applications on top of it.
MaidSafe is created by individual users who contribute storage power, computing power and bandwidth to form a decentralised internet in the world.
How Maidsafe Works
Decentralised Internet Model:
There are two main objects in the network, clients and farmers.
Clients use various network features such as browsing the web, storing data or transferring money.
Farmers store data and make it accessible when clients need it. Farmers are rewarded by the network with a storage fee (coming from clients) and by the system with SAFE Coin.
The data clients send to the network (images, videos, files ...) are fragmented, hashed and encrypted. The shards are then cloned and distributed randomly across the network.
On the farmers' side, the data are grouped according to random rules and stored in farmers' vaults.
This model eliminates intermediate servers allowing secure, decentralised, peer-to-peer data storage.
Proof-of-Resource (PoR):
Simply put, PoR checks if farmers are following the network's rules for storing pieces of data.
PoR measures the ability of vaults to retrieve or store blocks of data based on CPU speed, bandwidth availability, disk space, and time online.
If farmers fail to meet these standards are removed from the network.
Closed Group Consensus:
Basically, this is like DPoS, which is a small group of nodes that can make decisions on behalf of the whole system.
This helps the network to expand on a global scale like the internet today.
$MAID Use Case
Users share disk space, memory, and CPU processing power to help store data. When this data is downloaded from other users, they are rewarded with $MAID. This activity is called farming and the person helping to store the other data is called farmer.
If users want to upload their data to the network and store it in a decentralised way, they need to pay $MAID.
In the future when the Maid network is widely used, the current advertised models will not be able to be used. Instead, they will be rewarded with $MAID based on the number of app users.
In addition, developers can earn $MAID by updating bug fixes or adding new features to the network.
Crust Network
Crust Network is a project that provides a decentralised hosting ecosystem on Web 3.0. With the Crust network, users can choose to store on multiple protocol layers like IPFS or store on the application layer and decentralised compute layer.
Crust Network is focused on building a decentralised cloud ecosystem that values privacy and data ownership.
How Crust Network Works
Crust Network provides the opportunity for users to take advantage of the true power of decentralised networks. Crust Network allows files to be stored on different servers by distributing data across the entire network without being dependent on any users.
The security and reliability of data is enhanced through data encryption, secure backup, and authorised access.
At the same time, Crust Network will implement a shared storage model. With this model:
Resource providers take advantage of wasted resources by allowing them to serve as a repository on the network and receive rewards in return.
Users who need storage can take advantage of Crust Network's network for cheaper storage while still ensuring convenience, safety and security thanks to the network-wide decentralised mechanism under the Crust Network.
$CRU Use Case
CRU tokens can be used for the following purposes:
Maintain the GPoS consensus of the Crust Network.
Staking and receiving rewards.
Sponsorship of nodes.
Sponsor contracts and reward resource contributors.
Transaction fees for using the network.
Buy resource services on Crust Network.
Vote on the on-chain governance mechanism and vote on proposals.
TLDR:
With the rapid development of blockchain technology and the increasing demand for data storage, it is obvious that many companies will integrate the two to create a great platform for users.
The industry is still very young, but that doesn't stop us from looking forward to what will happen in the future.